Wednesday, May 27, 2009

Facebook takes on Russians

Now here's a topic which is very close to me, besides socio-politics, as i feed on the digital media industry.

Facebook is an app that has taken the world by storm, now with 200million registered users. 30% of them US citizens and rest, from everywhere else in the world.

I reckon it was a top 10 buzzword in Malaysia, in 2008. In that full year alone, its grown from 100K registered users to now hovering around 2 million. Incredible, mindblowing growth but not surprising.

In 2008, word of mouth about Facebook was tremendous... it was like an epidemic. Advertisers like Maxis and Media owners like Hitz.FM subsequently rode on the Facebook bandwagon and blew it in the mainstream media further propelling the steeply surging growth.

Facebook is now an everyday dosage to many. Research showed that an average Malaysian would log on Facebook twice a day and spend 42 minutes in total. Facebook is becoming the Tomogochi (or however you spell that device which lets you fucking feed a virtual pet) of yerterday.

Facebook has also been constantly revamping its site, keeping up with new trends like Tweeting - making their homepage look homogeneus to a Twitter homepage. It's introduced a chat bar now too which i believe many are using. Well, why not? with the 240M injection of funds from MSN.... funny thing is MSN is not even selling Facebook in Malaysia, despite terms stating otherwise. Worse for MSN is, Facebook's value has depreciated from 15B to 10B... Microsoft, Microsoft.... they're just sooooo trying to catch up with the other web players. If i start talking about Google, Microsoft will be like a Burma of the world.

Anyway, Facebook has just recently taken on a Russian investor injecting 200M into its coffers (article below) Mark says that its just gonna be a cushion for the turmoil but i think they got something up their sleeves.

Facebook also resumes to crack their brains hard on monetizing its platform which is visited by 60M Americans. This is again another topic im very fond of. I've spoken to many about the future of monetizing social media and ive heard from many ppl from many different perspectives.

Some say its time to look to the east, Some say they will find a suitable revenue model, Some say they will make you take on a subscription fee when it eventually becomes a way of your life (like your mobile phone), Some say they will take on transactions or some other models and profit from it and many other perspectives from different addicts of the industry.

Now enough of selling Facebook, here's the article from adage...

NEW YORK ( -- Facebook will get some help dealing with its already-commanding international presence from a Russian investor group, which today took a $200 million stake in the social network that valued Facebook at $10 billion. The money will also provide what CEO Mark Zuckerberg called a cash "buffer" in difficult economic times.

Social network's global growth has been rapid, and while it's had a hard time figuring out how to turn its U.S. visitors into revenue, it now has to figure out what to do with all the international visitors that have signed up in the past year as well.

Of course, the investment also means Facebook is valued less today than in summer 2007, when Microsoft pumped in $240 million at a $15 billion implied valuation. But Mr. Zuckerberg argued that Microsoft's investment was made near the market peak and was part of a multifaceted business relationship that included an advertising deal and an agreement to work together on search.

"That was a strategic relationship with a lot of different components," Mr. Zuckerberg said on a conference call. "It was a year and a half ago, and it was a different world at the time."
Multiple revenue modelsDigital Sky Technologies, which holds stakes in Russian portal and social network, got a 1.96% preferred equity stake in the company for its cash and also said it agreed to buy "at least" another $100 million of Facebook stock from current and past employees.

Mr. Zuckerberg said Facebook chose DST because it has investments in several overseas social networks, all with different business models, such as advertising and direct payments.
Facebook has more than 200 million registered users, 70% of which are outside the U.S. Overseas audiences are a tough sell for advertisers, but Facebook is testing a payments system that would help it tap one area of business that is growing internationally: the sale of virtual goods.

"Payments are not a large part of the business so far, but we believe it could be in the future," he said.

Employees cash outThe deal will allow Facebook employees to cash out at least some of their sizeable stakes, which some have been trying to do for some time. Mr. Zuckerberg declined to comment on a Wall Street Journal report that those shares would be purchased at a $6.5 billion valuation, indicating a big gulf between employee-held stock and preferred stock.

"As a private company, there is no market in our shares, so it's tough to say what a valuation would be," he said. "It is accurate to say the common stock would be different from this because there aren't any preferences."

DST, led by former CEO Yuri Milner and two other partners, won't join the Facebook board and won't be given "special observer rights" to the board's activities. Mr. Zuckerberg said the investment doesn't affect Facebook's plans for an initial public offering, rumored for some time. "It's not something we're thinking about right now and not something we're rushing towards," he said.

Mr. Zuckerberg stressed that the investment is a cushion and is not required for Facebook to reach its goal of becoming cash-flow positive in 2010. Facebook is expected to earn $500 million in revenue in 2009 and has more than 850 employees.

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